The U.S. Natural Gas Fund ETF (UNG) hit yet another 12 month low today of $5.77. The ETF has lost 1/3 of its value in the past 3 months and more than 1/2 in the last 12 months. Natural gas gets cheaper every day, but how long can this trend continue?
Mastery would love to say now is the time to buy as we have hit bottom. Everyday has been worse than Groundhog day for the UNG, the decline knows no limits. Nat gas keeps dropping along with the UNG because the price is low and there is plenty of supply.
At some point the madness should stop but the question is when? Mastery believes we are nearing oversold territory on the UNG but its difficult to know when the turning point will occur. Natural Gas prices are down more than 6% today, taking the UNG down near 4%. Today the Energy Information Administration said supplies are 13.4% higher than what they were a year ago and 17% above the five-year average.
American's aren't using as much as they used to because they don't want to spend the money. There's excess production and supply, thus its getting cheaper and cheaper. But what about winter, couldn't that finally bump the price up?
MASTERY Bottom line:
The negative nat gas party can't last forever and that's what we want our readers to consider.
This week we've been watching the weather and headlines of record snow and low temperatures across the U.S. Snow is coming this weekend to Chicago, Connecticut, New England, Kansas City, Nashville, Tenn. and even Seattle.
Could this cold snap be enough to get natural gas futures to 'cool their jets'? Mastery believes it may, thus we think the UNG could bottom out around $5.50.
CHART LANDIA
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